OFFSHORE CORPORATIONS OR COMPANIES IN PANAMA
Offshore corporations make it possible to eliminate obstacles to commerce and expedite trade, via the proper planning of a fiscal structure of companies, above all, utilizing the triangulation method and the re-invoicing of goods and services.
All of this can be achieved by the investor, without having to loose control of his investment or patrimony, always maintaining control of his operation.
BENEFITS AND ADVANTAGES OF OFFSHORE COMPANIES IN PANAMA
Panamanian companies or offshore corporations are well known around the world and offer the investor a series of advantages associated with Panama’s fiscal benefits.
Their importance resides in their versatility, their security, and the confidence derived of their easy administration, on the part of the investors.
Confidentiality in respect of beneficiaries, owners, or proprietors of a company or an offshore corporation, due to the fact that their names are only registered in the book of shares of the corporation and not in public offices.
Tax exemptions on goods, revenues, benefits, or earnings earned by the Panamanian company or offshore corporation, when these are obtained or produced outside the territory of the Republic of Panama.
Financial, Commercial and Tributary Declarations
It is not required the presentation of financial, commercial, or tributary declarations on activities carried out by the Panamanian company or offshore corporation outside of Panama.
Expeditious, simple and prompt Organization
Panamanian offshore corporations can be organized in a period between 48 and 72 hours. Nonetheless, the complete preparation of the package for its remittance can take from 5 to 7 business days, which will depend on additional services, which have been requested.
Language of the Corporate Charter
In Panama, the Corporate Charter of a company or an offshore corporation can be prepared in another language, in addition to Spanish.
Panamanian companies or offshore corporations allow the Shareholders or Board of Directors meetings to take place outside of Panama, and even in a virtual manner.
Capital of the Corporation
The capital of a company or offshore corporation in Panama need not be deposited in banks, or that the assets of the corporation be located in Panama.
The shares of companies or offshore corporations in Panama can be issued as Bearer or Nominative Shares.
One or more persons (natural or juridical), national or foreign, can be the proprietors of the Panamanian company or offshore corporation, except when the company in question is engaged in retail business within the Republic of Panama.
The composition of the Board of Directors must consist of no less than three (3) Directors, and a single person can occupy more than one position.
General Power of Attorney
In the event that total confidentiality is preferred, having the corporation nominal directors, the activities of the company or corporation can be addressed by means of a General Power of Attorney that does not require to be registered or inscribed in the Public Registry of Panama.
The flexibility of Panamanian companies or offshore corporations allows them to appear as proprietor or titleholder of all kinds of goods or assets, including bank accounts, located in any part of the world, without having these to be declared in Panama.
Invoicing and Re-Invoicing
The Fiscal Code allows that, under the territoriality principle, companies or offshore corporations constituted in Panama can carry out invoicing and re-invoicing operations for goods and merchandise, from an office located in Panama, if and when said products or merchandise do not enter the fiscal territory, these operations therefore being considered as extra territorial activities, and therefore exempt from income tax.
Law N° 32 of February 26, 1927 requires for the constitution or incorporation of a company or an offshore corporation, the agreement of two (2) or more persons of legal age, of any nationality, even if they are not domiciled in the Republic of Panama.
Our office provides the service of Corporate Charter subscribers, without any additional cost.
Offshore Corporations and Private Interest Foundations can be constituted from the place where you are, without the need for you to travel to our country.
For their existence, Panamanian Corporations do not require any capital advances before or after constitution.
Shares of corporations can be nominative or bearer and the shareholders of the Corporation can be conformed by natural persons or other corporations, be it national or foreign, one or more persons being able to be titleholders, and not needing to be present nor residing in the Republic of Panama.
Organization of a Company or Offshore Corporation in Panama
Offshore corporations, as they are also known, are organized in accordance to a constitution document denominated Corporate Charter, which must be duly notarized and registered in the Mercantile Section of the Public Registry of Panama.
The Corporate Charter of Corporations must, among other things, contain the following:
• The name of the corporation
• Name and domicile of the subscribers
• Business in which the corporation can engage in
• Authorized capital, amount, share distribution and share types
• The duration of the corporation
• Name and address of directors and dignitaries
• Name of the resident agent
Additional to the Corporate Charter of the Corporations, it is necessary to include the Share Registry, preferably duly authenticated.
Corporations which will not engage in commerce in the Republic of Panama, do no require commercial licenses to operate outside the territory of the Republic of Panama, for this reason they are called “Offshore” Corporations.
Names of a Corporation and / or Private Interest Foundation in Panama
Offshore corporations require of a name to identify and individualize them. This name must be available at the Public Registry of Panama.
Our company will verify the availability of names for Corporations as well as Foundations, as part of the constitution services of the corporation, reason why we request you provide us with three (3) possible names, in order of preference, in order to inform you the availability of same.
Social or Foundational Objective
Corporations can have any licit objective and engage in any commercial activity. A Standard Corporate Charter establishes a generic social objective, which allows the corporation to engage in any licit activity. However, the ordering party can request the expansion of the Social Objective and specify any activity he wishes.
Social or Foundational Capital
Companies or offshore corporations do not require their Nominal Capital to be paid in at the moment of constitution of the corporation, nor are deposits of any kind required. It is sufficient that the subscribers subscribe to one share, even if they subsequently renounce said share.
The corporations we have to offer have a nominal capital of USD. 10,000.00, which can be increased depending on the wishes of our clients, if and when the additional cost of the registration fee generated by this increase is paid.
Shares (only for Corporations)
The shares of a corporation can be nominative or bearer. In the event the corporation was to carry out commercial activities in Panama, the Law frequently demands the shares to be nominative. In other jurisdictions, bearer shares are restricted or simply not admitted.
Bearer shares grant the proprietor of the corporation a higher level of confidentiality. As a rule, a General Power of Attorney and Nominative Directors accompany bearer shares.
Distribution of Shares (only for Corporations)
The distribution of shares does not require registration in the Public Registry of Panama. The distribution of shares is recorded in the Register of Shares Book of the Corporation and depends on the clients’ instructions.
Directors and Dignitaries
The Client can freely appoint directors and dignitaries of the corporation, but can also decide to appoint Nominal Directors, proposed by our Law firm, in which case a corresponding fee will apply.
Corporate Charter or Foundational Act
Normally, corporate charters are “standard”, except in those cases where a special structure is requested.
Constitution Period and Remittance of a Company or an Offshore Corporation in Panama
An Offshore Corporation can be constituted in an average period that ranges from 48 to 72 hours, if and when we have the necessary information and the corresponding payment has been carried out.
The remittance period will depend on the place and the availability of the service provided by FEDEX or DHL. Remittance takes place generally from 5 to 7 working days after the confirmation of payment has been received.
FISCAL BENEFITS OF OFFSHORE CORPORATIONS IN PANAMA
Panamanian Corporations are subject to Panamanian territorial fiscal regime, which only requires the payment of taxes for operations taking place within the territory of the Republic of Panama.
For any other operation, which is consummated or is effectuated abroad, that is, operations of an Offshore character, Panamanian Companies or Corporations do not have to pay any taxes, except for the Annual Company Tax, even if the operation is managed from an office located in Panama.
Companies must pay an annual fee of US $300.00 for registration tax or duration, known as the Annual Company Tax.
DOMICILE, VIRTUAL OFFICE, AND RE-INVOICING
Domicile is a fundamental concept in the FISCAL PLANNING area of International Fiscal Planning. This connecting point allows the implementation of measures that permit the maximum fiscal savings, in a global and lasting manner.
In other words, establishing the Domicile of Companies or Corporations implies submitting to the fiscal regulations of the country where said domicile has been established, which in turn makes it possible to apply to an universal or territorial fiscal regime, depending if in the country one system or the other is applicable.
Panama has a fiscal system based in territoriality, which makes it obligatory to declare and pay taxes on the commercial activities that generate taxable income only within the Panamanian fiscal territory, thereby excluding the applicability of the universal income principle prevailing in many other countries.
Among the activities that the territorial system allows are the carrying out of import/export operations for prices equal or higher, via the utilization of an Intermediary Company which allows not only to make the commercial operation more efficient, facilitating payments and collections for example, but also the generation of savings.
This intermediation operation is commonly referred to as TRIANGULATION, due to the fact that in the operation there are three parties carrying out specific duties, one of them being the re-invoicing of merchandise, which is effectuated in accordance to the legislation presently enforced.
In effect, in accordance with article 694 of the Panamanian Fiscal Code, income generated by the following operations will not be considered generated within the territory of the Republic of Panama:
1. The invoicing from an office established in Panama of the sale of merchandise or products for an amount higher than the merchandise or products had been invoiced against the office established in Panama, if and when said merchandise or products are only transported abroad.
2. Direct, from an office established in Panama, transactions that are perfected, consummated, or are effective abroad.
3. Distribute dividends or participations of juridical persons, when said dividends or participations arise from income not generated within the territory of the Republic of Panama, including income generated by the activities mentioned in literals a and b of this paragraph.
As highlighted, the triangulation activity, also known as re-invoicing, can and must be carried out from an office located in the Republic of Panama, which implies the domicile of the corporation to be in Panama, without this generating any tax obligations.
In some cases, it is important that the international fiscal planning process involves the establishment, not only of a virtual office, but also the generation of a special accounting for the type of operation carried out, as well as the issuance of all type of documentation which evidences the existence of an operation based in Panama.
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